AgentInvesting

Renter priced out of market ponders alternative

Buying investment in cheaper market has its drawbacks

DEAR BENNY: I rent an apartment in California's Silicon Valley, where my job is. I can't afford a home here because prices average around $600,000. I believe I can afford to buy a house elsewhere while living here and paying rent. Is this a good idea, and can I still avoid PMI with a 20 percent down payment? --Todd DEAR TODD: I do not think that's a good idea. I believe that consumers should first buy a home for their own personal use, and then consider becoming a landlord. There are several reasons for my position. First, not everyone wants to be a landlord. There are good tenants and not-so-nice ones. If you haven't seen the movie "Pacific Heights," I recommend it to you. While the movie clearly involves an extreme situation, it highlights many of the problems that landlords often have to put up with. Second, an investment loan is not the same as getting a mortgage for your principal residence. Typically, loans for investment property carry a higher interest rate, and t...